Affiliate Disclosure
If you buy through our links, we may get a commission. Read our ethics policy.

Report: Apple stores' Mac sales beat PC stores by 10-to-1

An average Apple retail outlet easily outperforms its generic counterpart in terms of revenue and sales — but the expense of supporting all those customers may be pulling Apple down, says a new investment note from Bernstein Research.

Senior analyst Toni Sacconaghi expresses surprise at the numbers in the report, which observes that the typical Apple retail location sells about 21.4 Macs every day versus "less than 2" for many less specialized electronics shops. This amounts to about 8,000 Macs per store per year and played a crucial role in expanding the Mac's appeal: about two-thirds of store revenues came from the computers and likely earned Apple the lion's share of its converts.

"We estimate that the stores, which collectively represent just 2.5% of the Mac's global distribution points, drove more than one third of its market share gain during the year," Sacconaghi says.

The average Apple retail space grew its Mac sales by 26 percent year-over-year.

Apple was also the most efficient overall for retail stores, the researcher adds. For fiscal 2007, all of the Cupertino, Calif.-based firm's retail space earned roughly $4,500 per square foot. The figure contrasts starkly with big-box retailer Best Buy, who despite its success has only managed to earn $930 for the same floor space. Even the very profitable jeweler Tiffany & Company netted just $2,750 for every square foot in the same timeframe and was free from the competition of a shopping mall.

This could increase Apple's total revenue by almost $1.4 billion in the fiscal year, especially as the Mac maker earns the full retail price from each sale rather than just the wholesale price passed on to a third-party store. It also opens the door to third-party accessory sales that wouldn't be possible if Apple relied solely on resellers.

Charts

However, Apple may be sitting on a number of potentially volatile factors that could sink their success rates, the Bernstein analyst says. With staffing levels to provide sales and technical service climbing much higher than they normally would be at other stores — averaging at 40 workers per store — Apple's expenses for taking care of customers are growing faster than for store profits. Profit margins at the retail stores were just 21.3 percent during fiscal 2007 versus 24.7 percent for every other division.

iPod sales for each official store have also dropped by about 50 percent on average over the last year, the researcher says, placing more pressure on Apple to fare well in its Mac business. But as long as new efforts such as the iPhone continue to generate healthy profit margins and sales numbers, the threat of a sudden collapse is remote, Bernstein Research observes.

"We ultimately believe investors should look to maintain a market-weight in Apple, as we see explosive, yet balanced, risk on both sides," Sacconaghi says.



32 Comments

vinitaboy 18 Years · 156 comments

Every time there's an overwhelmingly positive report about Apple, it also includes an overwhelmingly negative note. Just another analyst (emphasis on the first four letters) covering his anus.

creb 21 Years · 276 comments

I just want Apple to tread conservatively while maintaining its progressive thinking. There has been too much hype around Apple driven by people who primary goal is to manipulate to make money off the financial markets. I do not see these people stopping anytime soon, but in the longrun I believe that they actually hurt Apple; in the short run those people could give a damn.

mrjoec123 19 Years · 223 comments

Apple Retail is the unsung hero of Jobs' post-return success. Everyone talks about the iMac, the iPod, the iPhone, iTunes, expanding the company into consumer electronics, etc. But none of that would have really been possible without the retail initiative. iPods would have gotten buried on CompUSA and Best Buy shelves.

It was his boldest and riskiest move, one that very few gave any chance of succeeding. But it was the foundation for everything that has happened since, and it will pave the way far into the future.

People don't realize that Apple Retail has broken all kinds of records. Fastest retail chain to ever get to 100 locations. All kinds of sales and revenue records, etc. It's a remarkable story.

I don't understand the ding for making a lower percentage profit because of hiring more workers and putting them in a place that's actually inviting. The profit margins on Apple products are already higher than on other consumer electronics and computers, anyway. And, as the analyst mentioned, Apple avoids the middle man by selling its own products directly. I think the extra money for slightly better trained employees and a clean atmosphere is money well spent. I actually wish they hadn't stopped some of the other more expensive features of the Stores, like large-screen theaters and the free water. But you have to make cuts somewhere, I suppose. I just hope that Apple continues to draw that line between profits and customer experience.

solipsism 19 Years · 25701 comments

Quote:
Originally Posted by mrjoec123

Apple Retail is the unsung hero of Jobs' post-return success. Everyone talks about the iMac, the iPod, the iPhone, iTunes, expanding the company into consumer electronics, etc. But none of that would have really been possible without the retail initiative. iPods would have gotten buried on CompUSA and Best Buy shelves.

It was his boldest and riskiest move, one that very few gave any chance of succeeding. But it was the foundation for everything that has happened since, and it will pave the way far into the future.

People don't realize that Apple Retail has broken all kinds of records. Fastest retail chain to ever get to 100 locations. All kinds of sales and revenue records, etc. It's a remarkable story.

I don't understand the ding for making a lower percentage profit because of hiring more workers and putting them in a place that's actually inviting. The profit margins on Apple products are already higher than on other consumer electronics and computers, anyway. And, as the analyst mentioned, Apple avoids the middle man by selling its own products directly. I think the extra money for slightly better trained employees and a clean atmosphere is money well spent. I actually wish they hadn't stopped some of the other more expensive features of the Stores, like large-screen theaters and the free water. But you have to make cuts somewhere, I suppose. I just hope that Apple continues to draw that line between profits and customer experience.

Without the hands on experience offered in these stores Macs wouldn't have grown nearly as much. WIh Apple Stores nearly doubling the 2nd largest retailer in terms of dollars per square feet, Apple can afford to hire a few more techs to service the machines that are purchased.

creb 21 Years · 276 comments

Quote:
Originally Posted by solipsism

Without the hands on experience offered in these stores Macs wouldn't have grown nearly as much. With Apple Stores nearly doubling the 2nd largest retailer in terms of square feet, Apple can afford to higher a few more techs to service the machines that are purchased.

I agree with you. Also, most of what I hear today is that Apple is now too mainstream.